So conversion rates are a bit difficult on its own report, the reason being from my own experience reps always bump things a step (As you have seen). Internally we do leverage this when possible but we also have a report which shows us each deal to change status over a period of time. A deal can appear in this report multiple times as it progresses but it gives you a good idea of the pipeline movement over a period of time.
Do you think this would be useful to you? If so I can dig up the steps I used to create this.